Freddie Mac reported this week that 79 percent of homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principal balance by paying-in additional money at the closing table in the first quarter of 2012.

Of these borrowers, 58 percent maintained about the same loan amount, and 21 percent of refinancing homeowners reduced their principal balance; the share of borrowers that kept about the same loan amount was the highest in the 26-year history of the analysis.

“Cash-out” borrowers, those who increased their loan balance by at least five percent, represented 21 percent of all refinance loans; the weighted average cash-out share during the 1985 to 2008 period was 50 percent.

The median interest rate reduction for a 30-year fixed-rate mortgage was about 1.5 percentage points, or a savings of about 27 percent in interest rate, the largest percent reduction recorded in the 27 years of analysis. Over the first year of the refinance loan life, the median borrower will save about $2,900 in interest payments on a $200,000 loan.

San Francisco Chronicle – Fannie Mae and Freddie Mac have issued new guidelines designed to speed up short sales and make them more consistent, but real estate agents question whether they are achievable in the real world.

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Wall Street Journal – Former Fannie Mae CEO, speaking on a panel at a conference, says that an influx of investors into the housing market – rather than government policy – was the main cause of the housing market’s collapse.

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The Federal Housing Finance Agency (FHFA) has streamlined the short sale process to help more home owners avoid foreclosure. The move calls for Fannie Mae and Freddie Mac to develop enhanced and aligned strategies for facilitating short sales, deeds-in-lieu, and deeds-for-lease.

The FHFA’s directive calls for servicers to:

Review and respond to requests for short sales within 30 calendar days from receipt of a short sale offer and a complete borrower response package;

Provide weekly status updates to the borrower if the short sale offer is still under review after 30 calendar days; and

Make and communicate final decisions to the borrower within 60 calendar days of receipt of the offer and complete borrower response package.

By the end of this year, Fannie Mae and Freddie Mac will announce additional enhancements that address borrower eligibility and evaluation, documentation simplification, property valuation, fraud mitigation, payments to subordinate lien holders, and mortgage insurance.

Late yesterday, the Federal Housing Finance Agency (FHFA) announced it has directed Fannie Mae and Freddie Mac to develop enhanced and aligned strategies for facilitating short sales, deeds-in-lieu, and deeds-for-lease in order to help more homeowners avoid foreclosure. The effort will come in stages with the first taking place this June. The new, aligned timelines include the requirement that mortgage servicers review and respond to requests for short sales within 30 calendar days from receipt of a short sale offer.

“C.A.R. applauds the FHFA for taking this important step to streamline the short sale process so that the housing market can begin a full recovery,” said C.A.R. President LeFrancis Arnold.  “We have long called for similar improvements to help ensure successful short sales and look forward to hearing about additional enhancements to further reform the process.”

The FHFA’s directive calls for servicers to:

• Review and respond to requests for short sales within 30 calendar days from receipt of a short sale offer and a complete borrower response package;

• Provide weekly status updates to the borrower if the short sale offer is still under review after 30 calendar days;

• Make and communicate final decisions to the borrower within 60 calendar days of receipt of the offer and complete borrower response package

By the end of this year, Fannie Mae and Freddie Mac will announce additional enhancements that address borrower eligibility and evaluation, documentation simplification, property valuation, fraud mitigation, payments to subordinate lien holders, and mortgage insurance.

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Housing Wire – A new Fannie Mae study suggests Americans are beginning to consider 2012 a good year to acquire a home.

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Fannie Mae’s latest quarterly National Housing Survey focuses on the state of home ownership aspirations among Americans across all demographic groups. The survey finds that despite the recent housing crisis, most Americans continue to believe that owning their home is preferable to renting it. The data also indicate that while financial constraints and employment concerns may be keeping potential home buyers on the sidelines in the near term, future improvements in employment and personal finances, a pickup in interest rates in response to stronger economic growth, and stabilizing home prices may move Americans to act on their aspirations in coming years.

• Across all education levels, Americans say owning makes more sense than renting.  This belief is held consistently across all demographic groups.

• Nearly two-thirds of current renters say that they will buy a house at some point in the future.

• Non-financial factors such as safety and quality of local schools continue to be the top reasons for buying a home across all income groups.

• African-Americans and Hispanics are more likely to cite various benefits, such as buying a home as a way to build wealth, homeownership as a symbol of success, and civic benefits.

Attitudes about homeownership as an investment, financial constraints, and mortgage accessibility may mean that more Americans choose not to act on their aspiration for homeownership, thus potentially leading to lower homeownership rates.

• The margin of Americans believing homeownership has the highest investment potential has declined over the past several years.

• At the same time, the perceived safety of owning a home as an investment has trended downward, reaching a low of 63 percent in the fourth quarter of 2011.

• In turn, groups with higher levels of education and higher incomes are more likely to think buying a home is a safe investment.

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Fannie Mae and Freddie Mac completed more than 2.1 million foreclosure prevention actions since the start of conservatorship including 1.1 million permanent loan modifications. These actions, designed to help borrowers stay in their homes, are detailed in the Federal Housing Finance Agency’s fourth quarter 2011 Foreclosure Prevention and Refinance Report. The report also shows that after nine months, fewer than 20 percent of Enterprise loans modified in the four quarters ended March 31, 2011, had missed two or more payments, an improvement over prior years.

With this report, FHFA releases new state data sets and launches an interactive Fannie Mae and Freddie Mac State Borrower Assistance Map, showing the number of loans owned or guaranteed by Fannie Mae and Freddie Mac, delinquencies, foreclosure prevention activities, Real Estate-Owned (REO) properties, and refinances in each state. In addition, the report now includes a graphic showing Delinquent Loans by State and Profiles of Key States, with detailed information about states with the biggest five-year decline in house prices and the highest number and rate of seriously delinquent loans.

Also in the report:

• Half of all borrowers who received loan modifications in the fourth quarter had their monthly payments reduced by over 30 percent, and one-third included principal forbearance.

• Serious delinquency rates for Fannie Mae and Freddie Mac loans remain below industry levels and continue to decline.

• California had the largest number of completed foreclosure prevention actions since the beginning of conservatorship in 2008.

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The Federal Housing Finance Agency (FHFA) has targeted Los Angeles as one of the hardest-hit areas for inclusion in its Real Estate-Owned (REO) Initiative pilot program.

Under the pilot plan, institutional investors will be able to purchase large blocks of Fannie Mae- and Freddie Mac-owned foreclosed properties in bulk with the requirement to rent the purchased properties for a specified period of time.

While the program may be beneficial in some parts of the country where REO inventory is high, it would not be favorable in California, where housing inventory is extremely low and demand is high, even in the state’s hardest-hit areas.  REOs in California are getting multiple offers at top dollar and usually closing within 60 days on average.

C.A.R.’s Leadership Team is meeting with California Congressional members, the FHFA, and FHA in Washington, D.C., this week to voice its concern with this issue and to determine how C.A.R. can assist the housing regulators in the disposition of REOs.

See C.A.R.’s letter to California Congressional members voicing its concerns over the plan.

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Washington Post – The Federal Housing Financing Agency released a plan Tuesday for beginning to wind down Fannie Mae and Freddie Mac, largely by increasing fees charged to borrowers.

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